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Infosys Technologies, India's second-largest information technology services company, is understood to have bagged the first of the Department of Post's IT modernisation contracts.

The Bangalore-based company pipped its bigger domestic rival, Tata Consultancy Services, to clinch India Post's 'rural information and communications technology system integrator contract, worth about Rs. 100 crore (Rs. 1 billion).

Infosys declined to comment, while the India Post official concerned could not be reached despite repeated attempts. India Post is embarking on a massive IT modernisation programme under the 'India Post 2011' plan.

As part of this, the department has split the programme into eight projects.
According to highly-placed sources, the department has already issued requests for proposals for six contracts.

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The 'rural ICT SI' contract is said to be the first of the eight contracts. According to the terms of the contract, Infosys will be responsible for enabling the Gramin Dak Sewak post office to perform e-transactions.

The department has the largest postal network in the world, with 155,669 post offices. About 89 per cent of these are in rural areas, according to its website. So far, only 12,604 head post offices and sub-post offices have been computerised.

Ever since Infosys established a separate business to focus on the domestic IT outsourcing market, it has been aggressively participating and winning government contracts.

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It is working with the income tax department in managing the centralised processing centre that processes all electronically-filed returns and a part of the paper filings.

The project recently bagged the Gold award in "excellence in government process re-engineering" at the 14th National e-Governance Conference. India contributes about two per cent to Infosys' total revenue.

Meanwhile, the bidding process for India Post's Rs. 1,000-crore (Rs. 10 billion) 'core system integrator' contract is on.

This is touted as the largest of the eight contracts. Capgemini, Accenture, IBM, HP, TCS, Infosys, HCL and Wipro are some companies believed to be participating in the contract, expected to be finalised in two months.

India Posts' IT modernisation initiative is expected to create over Rs. 5,000-crore (Rs. 50 billion) opportunities for IT services and hardware companies.